Samsung hits five quarters of record profits, sells 500 handsets per minute

Samsung, in an earnings preview Monday, estimated its Q4 2012 profit at $8.3 billion, edging out rival Apple’s quarterly profits in its most recent earnings posted in October 2012. The company also said it sold nearly 500 handsets across the globe every minute.

The Korean giant is expected to release its full, official quarterly earnings on January 25, 2013. The Galaxy S III bested the iPhone 4S in Q3 2012 to become the world’s best-selling smartphone, but the device fell from 18 million units to 15 million units in Q4. Analysts say the most recent quarter marks five straight periods of record growth for Samsung. However, its Q1 2013 results are likely to slow down as demand seasonally falls.

"The Note was selling well, boosting fourth-quarter profit, while iPhone 5 sales were less than expected," Song Myung-sub, an analyst at HI Investment & Securities, told Reuters.

"Samsung's profit will drop in the current quarter because of decreased phone profits. It will launch its next Galaxy S model only in March or April so, without new models, phone sales prices will fall in the current quarter. For the whole year, Samsung will launch new models faster than Apple and will continue to have the upper hand in the smartphone market."

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It's rather misleading to compare Samsung's holiday quarter profit to Apple's July-September quarter profit, when you know both companies have strong seasonality, and that Apple's holiday quarter profit, even for the holidays of 2011, was more than $13B. (http://www.apple.com/pr/library/2012/01 ... sults.html)

So, Samsung's $8.3B number is indeed huge, huge, HUGE, but it's deceptive to imply it has reached Apple-like levels. (Apple will likely earn almost double Sammy's profit in the holiday quarter). Getting there, though. Clearly, the _business_ side of smartphones is now a two-horse race between Apple and Samsung, with no one else even in the same ballpark.

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Ah analysts. They take an interesting story and add inane "analysis." Is anyone surprised that Samsung launches new models faster than Apple? And whose expectations of iPhone 5 sales weren't met? Apple seemed pretty happy and exceeded their guidance, as I recall.

Still, great news for Samsung. They seem to cover pretty much anything you need in consumer electronics these days.

I'm glad Apple has a real competitor in the phone market. I think it helps keep phones get better. I see more and more people that previously would have been offended at the thought of anything other than an iPhone moving over. It's interesting to watch. Still really want that iPhone 5 though.

It's rather misleading to compare Samsung's holiday quarter profit to Apple's July-September quarter profit, when you know both companies have strong seasonality, and that Apple's holiday quarter profit, even for the holidays of 2011, was more than $13B. (http://www.apple.com/pr/library/2012/01 ... sults.html)

So, Samsung's $8.3B number is indeed huge, huge, HUGE, but it's deceptive to imply it has reached Apple-like levels. (Apple will likely earn almost double Sammy's profit in the holiday quarter). Getting there, though. Clearly, the _business_ side of smartphones is now a two-horse race between Apple and Samsung, with no one else even in the same ballpark.

Edit: Note also that the $8.3B number from Samsung is _operating_ profit, while the $13B and $8.2B numbers from Apple are _net_ profit, which is generally significantly smaller than operating profit, due to taxes etc.

I'm glad Apple has a real competitor in the phone market. I think it helps keep phones get better. I see more and more people that previously would have been offended at the thought of anything other than an iPhone moving over. It's interesting to watch. Still really want that iPhone 5 though.

The sadder side is that Samsung and Apple are really the only two competitors left now, after seeing HTC's numbers drop so much. Maybe Google/Motorola, Microsoft/Nokia, or RIM can do something to kickstart the industry again, but it will be a few years at least before iOS and Android have any significant competition.

I'm glad Apple has a real competitor in the phone market. I think it helps keep phones get better. I see more and more people that previously would have been offended at the thought of anything other than an iPhone moving over. It's interesting to watch. Still really want that iPhone 5 though.

The sadder side is that Samsung and Apple are really the only two competitors left now, after seeing HTC's numbers drop so much. Maybe Google/Motorola, Microsoft/Nokia, or RIM can do something to kickstart the industry again, but it will be a few years at least before iOS and Android have any significant competition.

And Samsung supplies Apple with parts, which always makes for an amusing situation.

Granted that I've been told that Samsung's internal divisions aren't particularly fond of each other anyway.

Not just wallet, but a cut of everything sold on Google Play. And even though Android is "free" as far as licensing costs, I'd be surprised if Google didn't make any money directly from the manufacturers of "official" Android devices.

It's rather misleading to compare Samsung's holiday quarter profit to Apple's July-September quarter profit, when you know both companies have strong seasonality, and that Apple's holiday quarter profit, even for the holidays of 2011, was more than $13B. (http://www.apple.com/pr/library/2012/01 ... sults.html)

So, Samsung's $8.3B number is indeed huge, huge, HUGE, but it's deceptive to imply it has reached Apple-like levels. (Apple will likely earn almost double Sammy's profit in the holiday quarter). Getting there, though. Clearly, the _business_ side of smartphones is now a two-horse race between Apple and Samsung, with no one else even in the same ballpark.

Edit: Note also that the $8.3B number from Samsung is _operating_ profit, while the $13B and $8.2B numbers from Apple are _net_ profit, which is generally significantly smaller than operating profit, due to taxes etc.

Samsung's number are not a clear indication of smartphone profitability or success.

At last count Apple is pulling in 70+% of all mobile handset profit worldwide (all moblie phones not just smartphones). No matter how many handsets Samsung sold they're making less than 1/3rd the profits that Apple is.

Unlike Apple Samsung's profits also include manufacturing and fabrication. Considering that 70% of Samsung's Application Processor production is dedicated to Apple products, they owe Apple due credit for that profit. Profit that they will lose by 2014 (1 year) as Apple moves to new/other fabrication facilities. Samsung will also lose Apple's business for LCD, memory, etc,.

Considering that Apple surpassed HP in computer production, if you include the iPad, it is the largest consumer of memory and one of the largest consumer of LCD panels for computers. Samsung has a lot to lose.

However, its Q1 2013 results are likely to slow down as demand seasonally falls.

I wonder how well these numbers will pan out when they attempt to transition away from Android. Android's become a household name and (maybe it's just me, but) I feel that even if they transition to another system like it, they'll be seen as an off brand Android.

I'm actually surprised their numbers are so high. Most Samsung phones feel fragile to me. Like they took some glass and threw some plastic on it and said "Good luck, user!" I guess the numbers tell me most people don't feel the same way.

I'm glad Apple has a real competitor in the phone market. I think it helps keep phones get better. I see more and more people that previously would have been offended at the thought of anything other than an iPhone moving over. It's interesting to watch. Still really want that iPhone 5 though.

The sadder side is that Samsung and Apple are really the only two competitors left now, after seeing HTC's numbers drop so much. Maybe Google/Motorola, Microsoft/Nokia, or RIM can do something to kickstart the industry again, but it will be a few years at least before iOS and Android have any significant competition.

And Samsung supplies Apple with parts, which always makes for an amusing situation.

Not for much longer... they'll be getting their last check by 2014.

Apple is moving to other manufactures and they are now building their own fabrication plant.

I can see why Apple might want their own fab plant as an alternative to being dependent on their major competitor for parts. Of course, fab plants are notoriously less profitable (if not non profitable at times) so I wouldn't expect it to be beneficial to Apple's margins going down that path. Flexibility though has its price.

What do we learn from this? Own fabs are king. Outsourcing does not work and will never work.

Ericssons and Nokias heydays where when they had their own fabs. Ericsson was 2-3 year before competition in 1997. Ericsson did a huge mistake and hired a Microsoft guy and started a UNIX purge where developers lost their Unix WS and had to use Clippy to develop new phones. The profits went down. Ericsson outsourced production to Flextronics.

And that was the death blow to Ericsson. At one time the world largest cellphone company. With outsourcing the first thing that happened was a production delay almost 9 month. When production started they produced to few. (this is exactly what also happened AMD with Globalfoundries. First delay of 32nm and the horrible yields killing AMD). With outsourcing another company have to make money. They think first for their best instead of own factories where its focused for the best of the company.

Then we have the greedy OEMs. HTC started to produce Ericsson phones. "Why don't we make our own?". HTC is born.

Fast forward to Samsung. Apple fronted money to Samsung to build factories. Samsung knew the parts Apple used and the roadmap 18 month in advance (and this have been confirmed by the executive that leaked Apple roadmaps and was convicted for it). "Why not make our own iPhones? We build the parts". Samsung megaprofits are born.

And yes... It would not have been possible if Galaxy was not a great phone. Its the greatest Android phone out there. Especially since their is so many that App developers can target that hardware. Integrated is always better then fragmented.

Now when Nokia have sold its factories they can never compete with Samsung. Samsung and Nokia can have the exact same price and hardware. Samsung will make 15% more profit since they don't have to pay OEMs.

This is exactly the same reason why Apple have such a huge marginals. People belive its an "Apple tax". In real life its that Apple fronts the money for factories and get the parts cheaper + AppleStore have a margin of 9.5%. That is 1/3 then most other retails. Just that fact means that Apple make 20% more profit for a 1000 dollar computer then Levento 1000 dollar computer. The proof for this is simple: Look at ultra books and configure them same as Air. Its the same price.

Apple spends almost 12 billion on tooling each year. That is more then for example Intel. But their strategy is to get other to manufacture the stuff. They should move all in house since OEMs goes crazy before or later. What stops FoxCon/HonHai to start manufacture its own computers/phones? They have the blueprints for almost all computer/phone manufactures.

My hat is of to Samsung. Great work. BTW. Isn't it fun that Fandroids believe all Apple users are stupid and victims of commercials. At the same time Samsung spends almost 10 times as much money on advertising then Apple.

The big question is: Android is killing the phone industry. All companies beside Samsung looses money. How many years can the competition loose money before they bail out? Nokia had a chance to make it a 3 way race, but the manchurian candidate Elop don't want that. Imagine an Android Lumia 920? An Android pureview? It would have sold much better.

@shompa some good thinking there, but Nokia should've pressed on with MeeGo/Harmattan (advancing the N9) instead of being another Android mee-too. They had the patents, the industrial design, the slick home-grown OS (which arguably in many cases performed better than Android), the tech (PureView, etc.) and the brains to put it all together (the guys who branched out and started Jolla).

All they needed was to build an ecosystem, not an an OS (Win Mobile) - they've already had theirs (MeeGo) that was mainly on par and more. They needed a guy in charge who could make deals with developers and content creators, not the guy who could choose an OS for them (a nice one, but underpowered and featureless then).

And where has it all got them? Down to 5% market share with no prospects (http://communities-dominate.blogs.com/. ... 6ee970b-pi) - I think that looking back, many of us would've rather taken a risk with home-grown stuff (MeeGo/N9) than outsourced (Win Mobile) even if we would've been at the same level now. And not listen to analysts and American tech blogs too much, too.

Nokia had their chance to innovate and be the third choice (reviews for MeeGo/N9 were overwhelmingly positive), but now they're just a Win Mobile OEM with only a Nokia Drive to differentiate themselves.

Nokia had their chance to innovate and be the third choice (reviews for MeeGo/N9 were overwhelmingly positive), but now they're just a Win Mobile OEM with only a Nokia Drive to differentiate themselves.

Reviews of WP were also overwhelmingly positive. The press likes to eulogize about cancelled products while skipping over the nasty bugs etc. Had Nokia gone with MeeGo there is no doubt they would be in even worse position they are now. Nokia does good hardware but they shouldn't do software because frankly they're not good at it. Also lack of apps would have hurt MeeGo even more. At least with MS there is a struggling ecoystem, with Meego they would have a dead ecosystem.

I can see why Apple might want their own fab plant as an alternative to being dependent on their major competitor for parts. Of course, fab plants are notoriously less profitable (if not non profitable at times) so I wouldn't expect it to be beneficial to Apple's margins going down that path. Flexibility though has its price.

The experts would disagree..

"Prior to his departure Intel’s Paul Otellini had begun speaking about manufacturing. He argued that the “fabless” model was no longer competitive and that design and manufacturing should be re-integrated."

This kind of thinking is also in tim Cook's DNA and Apple has a whole.

Where already seeing these moves from Google with their purchase of Motorola. Motorola also makes chips.

Basically the whole-widget model seem to be the winning model, if you consider that Apple and Samsung currently dominating the market. I suspect Motorola will move successful into this space as they progress.

The WinTel model is dying when it comes to compact moblie devices that cannot be assembled from off the shelf parts, such as, smartphones, tablets and media players like the iPod/iPod Touch.

It will be interesting to see who has the bigger muscle: Android or Samsung.

If it's as I suspect, Samsung, then I'd suspect that Samsung will be wringing concessions out of Google such as being paid to install Android on their phones, revenue sharing, or best of all (from Samsung's perspective) perhaps making Android or parts of Android Samsung-exclusive.

Executives at Samsung will be well-aware that it's Microsoft that became important while the individual PC manufacturers faded to obscurity, no matter how dominant they appeared at the time. Samsung needs to lock in their advantage now while they're at the top of the heap.

I think this article needs to be quoted every time Ars talks about the Samsung v Apple case and the $1.1 billion dollar settlement. We, or at least I, need to have some perspective on how much these companies actually make.

It will be interesting to see who has the bigger muscle: Android or Samsung.

If it's as I suspect, Samsung, then I'd suspect that Samsung will be wringing concessions out of Google such as being paid to install Android on their phones, revenue sharing, or best of all (from Samsung's perspective) perhaps making Android or parts of Android Samsung-exclusive.

Executives at Samsung will be well-aware that it's Microsoft that became important while the individual PC manufacturers faded to obscurity, no matter how dominant they appeared at the time. Samsung needs to lock in their advantage now while they're at the top of the heap.

Samsung built the best Android phones for a long time, to the point that there really wasn't much competition. HTC and Motorola are both building good, appealing devices. As time goes on, Google needs Samsung less and less. I don't think Google would allow Samsung to strong arm them.

This is why that right now while Samsung dominates the market (and I do think it's Samsung, not Android - I see 50 times as much advertising for Samsung as Android), it has to act now to lock in its lead, lest it become another IBM or Compaq in 5 years time.

Google's best hope is that Samsung is either too arrogant or not arrogant enough.

Too arrogant to believe that they could ever be de-throned as king of the cell-phone heap, or

Not arrogant enough to believe that most customers buy Samsung phones, not Android phones.

Samsung's "fast follower" strategy sure has paid off for them (at the expense of some court troubles). Can't argue with those results.

I still think it's Google that has the most to worry about Samsung's success. Google wanted a vibrant Android ecosystem, not an ecosystem completely lopsided 80%+ towards Samsung. That gives them very strong bargaining power and puts Google in the same situation they were when they had to give up the wireless network neutrality fight to partner with Verizon at the expense of their core principles.

Also lack of apps would have hurt MeeGo even more. At least with MS there is a struggling ecoystem, with Meego they would have a dead ecosystem.

MeeGo was close enough to plain vanilla Linux, and Linux software is overwhelmingly open-source, that any software can just be re-compiled for the platform with minimal modifications. It has the biggest selection of (free) apps anywhere, ever, because of it.

I still can't find the NoMachine/NX remote desktop client for iPhone or Android... But it's available on MeeGo and the N9.

Samsung's "fast follower" strategy sure has paid off for them (at the expense of some court troubles). Can't argue with those results.

I still think it's Google that has the most to worry about Samsung's success. Google wanted a vibrant Android ecosystem, not an ecosystem completely lopsided 80%+ towards Samsung. That gives them very strong bargaining power and puts Google in the same situation they were when they had to give up the wireless network neutrality fight to partner with Verizon at the expense of their core principles.

Samsung is dominant in no small part because of Google. Their flagship (Nexus) phones are just about exclusively made by Samsung. Though recently LG got its foot in the door. And tablet-wise, Google's Nexus 7 is outselling Samsung's offerings. Amazon, choosing their locked-down platform strategy is probably the bigger threat to an open and viable Android platform. Google has enough money that they could start dumping good quality, zero-margin Android phones on the market, like they did with the Nexus 7, and give Samsung some competition.

It's also worth nothing that a huge portion of Samsung's profits come from Apple.

According to Goldman Sachs Samsung stands to lose a lot of cash as Apple walks away. Just by moving 30% of their AP chip sales, Samsung stands to lose 8.7 trillion won over the course of a year. Clear Apple is moving their cutting (most profitable A5, A6) to new partners, which leaving the less powerful (least profitable) A4 with Samsung.

Samsung can knock off 20% of that operating revenue next year that won't be coming from Apple. That doesn't include memory (apple consumes 50% of the NAND chips worldwide) and LCD panels (already outstrip HP's consumption).

Samsung is going to pay dearly for crossing Apple, it seems.

"Goldman Sachs estimates Samsung's AP chip sales to Apple will rise to 9.3 trillion won ($8.8 billion) this year, or nearly 80 percent of Apple's spending on Samsung processing chips, memory chips and flat screens. But that could tumble to just 2.5 trillion won next year, as Apple will shift 30 percent of its AP business from Samsung and eventually 80 percent by 2017, according to Goldman." - Reuters

The part which includes the money from Apple is the bottom part, semiconductors. Samsungs telecom-business dwarfs their semiconductor-business. Of course we are still talking about lot of money. But when we talk about their telecom-business, we are talking about even more money.

Apple spends almost 12 billion on tooling each year. That is more then for example Intel. But their strategy is to get other to manufacture the stuff. They should move all in house since OEMs goes crazy before or later. What stops FoxCon/HonHai to start manufacture its own computers/phones? They have the blueprints for almost all computer/phone manufactures.

For a year we’ve been debating here to what degree Apple has a “capital intensive” business and what exactly could it be spending capital on. One early hypothesis has been that it’s on data centers or on real estate for spaceship campuses. These can be easily dismissed on the knowledge that they can’t cost that much (and that the spending happens gradually). Another hypothesis is that the tooling for milled aluminum cases and other mechanical components is expensive and Apple has to buy a lot of it. But, again, the level of expenditure is in the league of Intel and Samsung which make vast quantities of semiconductors in very expensive plants. It’s hard to imagine milling machines being cost equivalent to chip foundries.

Apple spends almost 12 billion on tooling each year. That is more then for example Intel. But their strategy is to get other to manufacture the stuff. They should move all in house since OEMs goes crazy before or later. What stops FoxCon/HonHai to start manufacture its own computers/phones? They have the blueprints for almost all computer/phone manufactures.

For a year we’ve been debating here to what degree Apple has a “capital intensive” business and what exactly could it be spending capital on. One early hypothesis has been that it’s on data centers or on real estate for spaceship campuses. These can be easily dismissed on the knowledge that they can’t cost that much (and that the spending happens gradually). Another hypothesis is that the tooling for milled aluminum cases and other mechanical components is expensive and Apple has to buy a lot of it. But, again, the level of expenditure is in the league of Intel and Samsung which make vast quantities of semiconductors in very expensive plants. It’s hard to imagine milling machines being cost equivalent to chip foundries.

Those numbers are very deceptive since Samsung telecom business probably pays cost for processors, memory or chips, which is a boost to their margins. Thus the cost of the foundries and manufacturing for those parts are born by the other business units, which are heavily subsided by Apple's purchases of processors, memory or chips that make up the majority of their silicon production and sales.